Engineering Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 46,000 engineering services firms in the US provide evaluation, investigation, planning, design, and development services related to utilities, structures, buildings, machines, equipment, processes, or systems. Specialty areas include civil, mechanical, industrial, electrical, electronics, computer hardware, aerospace, environmental, chemical, health and safety, materials, petroleum, nuclear, and biomedical engineering. Firms work on specific projects for clients and must be adept at project planning and management.
Dependence on Highly Skilled Personnel
Engineering service firms rely on a highly-educated, professional workforce.
Liability
Work site hazards and the complexity and scale of engineering projects expose engineering services firms to liability.
Industry size & Structure
A typical engineering services firm operates out of a single location, employs 25 workers and generates around $6.6 million in annual revenue.
- The engineering services industry consists of about 46,000 companies that employ over 1 million workers and generate $303 billion annually.
- Customer industries include general building, transportation, petroleum, power, hazardous waste, water, sewer/waste, industrial, and manufacturing.
- The engineering services industry is fragmented: The 50 largest firms account for only about 35% of industry revenue.
- Large companies include Fluor, Bechtel, and AECOM.
Industry Forecast
Engineering Services Industry Growth
Recent Developments
Dec 23, 2024 - Construction Starts Rise
- The total value of construction starts increased 5% in November from October, according to Dodge Construction Network. The gain was led by a 16% increase in nonbuilding construction amid a 63% jump in environmental public works starts, followed by a 35% rise in utility/natural gas starts. Miscellaneous nonbuilding starts advanced 3%, but highway and bridge starts declined by 6%. The total value of nonresidential building construction starts increased 2% in November from October. The gain was led by a 43% increase in commercial construction amid robust data center, warehouse, and parking garage starts. Manufacturing starts fell 52% in November and institutional starts were off by 9% after both segments posted strong gains in October. Residential starts were down 1% in November as a 5% increase in single-family starts was not enough to offset a 12% drop in multifamily.
- Some industry insiders expect the construction sector to improve in 2025, according to Engineering News-Record. Dodge Construction Network forecasts that total US construction starts will rise 8.6% in 2025 after posting gains of 8% in 2024. Dodge expects nonbuilding construction spending to grow 8.8% in 2025, led by highways (up 14.2% over 2024), followed by bridges (+11%), water supply systems (+6.1%), and power plant/gas/communications (+1.1%). The American Road & Transportation Builders Association forecasts highway construction spending will see a gain of 11.5% in 2025 over 2024 levels and spending on bridges will rise 8.9%.
- The Associated Builders and Contractors (ABC) Construction Backlog Indicator fell 0.1 months to 8.4 months in November compared to a year earlier. November backlogs were flat from October. The infrastructure backlog increased by 0.8 months in November 2024 to 8.7 months over the same month a year earlier. However, November’s commercial and institutional construction backlog fell 0.1 months to 8.5 months year-over-year, and the heavy industrial backlog fell by 0.1 months to 8.7 months over the same period. The ABC’s Construction Confidence Index for sales rose to 57 in November from 53.1 in October. A Confidence Index sales reading of 50 or more indicates most contractors are optimistic about sales. ABC Chief Economist Anirban Basu said, “Contractor confidence surged in November even though backlog was unchanged for the month. This sudden improvement in confidence reflects increased policy certainty in the wake of November’s presidential election, and contractors are optimistic about the prospect of falling borrowing costs over the next several quarters. Though backlog contracted in the commercial and institutional and heavy industry categories last month, contractors expect increased activity in privately financed segments during the next six months.”
- Construction industry economists and other experts outlined the potential opportunities and challenges the sector faces in 2025 during a November webcast hosted by construction software firm ConstructConnect. Moderating inflation is a key tailwind for the construction sector, as prices for most inputs have fallen. Lead times for many products have also dropped, except for certain types of electrical equipment. Construction industry observers also anticipate the incoming Trump administration will curb regulations, which could speed up project starts. However, Donald Trump’s plan to implement tariffs could increase prices for construction inputs and possibly spark a trade war. The Trump administration is also expected to be less supportive of projects funded through Biden-era programs, including the Infrastructure Investment and Jobs Act, the Chips and Science Act, and the Inflation Reduction Act. The construction sector also lacks enough workers, a condition that could worsen amid a Trump crackdown on immigration.
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